Definitive global law guides offering comparative analysis from top-ranked lawyers
CHAMBERS GLOBAL PRACTICE GUIDES
Shareholders’ Rights & Shareholder Activism 2025
Definitive global law guides offering comparative analysis from top-ranked lawyers
Contributing Editor Spencer Summerfield Travers Smith LLP
Global Practice Guides
Shareholders’ Rights & Shareholder Activism
Contributing Editor Spencer Summerfield Travers Smith LLP
2025
Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan
Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com
Copyright © 2025 Chambers and Partners
Contents
INTRODUCTION Contributed by Spencer Summerfield, Travers Smith LLP p.4 BRAZIL Trends and Developments p.7 Contributed by Loeser e Hadad Advogados
LUXEMBOURG Law and Practice p.143 Contributed by GSK Stockmann SA MACAU SAR, CHINA Law and Practice p.157 Contributed by Riquito Advogados
CHINA Trends and Developments p.13 Contributed by T&C Law Firm
MOLDOVA Law and Practice p.174 Contributed by Efrim, Roșca and Associates Trends and Developments p.189 Contributed by Efrim, Roșca and Associates
CYPRUS Law and Practice p.19 Contributed by Chryssafinis & Polyviou LLC
NETHERLANDS Law and Practice p.194 Contributed by Loyens & Loeff
FRANCE Law and Practice p.32 Contributed by Vermeille & Co Trends and Developments p.49 Contributed by White & Case LLP
SINGAPORE Trends and Developments p.207 Contributed by WMH Law Corporation SOUTH KOREA Law and Practice p.213 Contributed by Kim & Chang Trends and Developments p.232 Contributed by Hannuri Law
GERMANY Law and Practice p.57 Contributed by SZA Schilling, Zutt & Anschütz Trends and Developments p.76 Contributed by SZA Schilling, Zutt & Anschütz
HUNGARY Law and Practice p.82 Contributed by Oppenheim Law Firm INDIA Law and Practice p.103 Contributed by Dua Associates
USA Law and Practice p.238 Contributed by Sidley Austin SWITZERLAND Law and Practice p.254 Contributed by Bär & Karrer
JAPAN Law and Practice p.119 Contributed by Mori Hamada
ZIMBABWE Law and Practice p.268 Contributed by ChimukaMafunga Commercial Attorneys Trends and Developments p.281 Contributed by ChimukaMafunga Commercial Attorneys
Trends and Developments p.137 Contributed by Nishimura & Asahi
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INTRODUCTION Contributed by: Spencer Summerfield, Travers Smith LLP Travers Smith LLP is a leading full-service UK law firm acting for publicly listed and private companies, financial institutions, institutional investors, man- agers and sponsors on UK and international man- dates. The listed company advisory team supports the firm’s relationship with listed company clients and their wider groups by providing tailored, practi- cal advice on the full spectrum of corporate govern- ance, ESG, reporting, AGM and stakeholder engage- ment requirements. Travers Smith has long-standing, market-leading experience of advising listed clients
(and the occasional private company) on the tools and strategies to consider when faced with activist shareholders, from dealing with publicity and internet campaigns, and successfully defending requisitioned General Meetings, to negotiating settlement agree- ments and setting up information barriers when an activist nominee is appointed to a board. The team also regularly advises on corporate governance is- sues and the practical steps to take in order to mini- mise the risk of shareholder activism.
Contributing Editor
Spencer Summerfield became head of corporate in 2013 having been head of corporate finance since 2003. He retired from the partnership in June 2025 and is now a senior consultant. He has a broad corporate
practice, but his principal area of work is UK and international corporate finance, including mergers, acquisitions and disposals, flotations and underwritings, corporate joint ventures and general corporate advice. His clients include a number of large quoted and private companies based in the UK and overseas, as well as several financial sponsors.
Travers Smith LLP 10 Snow Hill London EC1A 2AL UK Tel: +44 20 7295 3000 Web: www.traverssmith.com
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INTRODUCTION Contributed by: Spencer Summerfield, Travers Smith LLP
Shareholders’ Rights and Shareholder Activism 2025: A Global Overview Shareholder activism – whereby shareholders seek to exercise their rights to exert influence on a company or its management with the purpose of instigating change – remains a fixture of global capital markets. In recent years, activists have increasingly positioned themselves as champions of shareholder value, hold- ing management and boards accountable for their performance. Investors are demanding higher stand- ards of directors and are quick to act where those demands are not met. Activist shareholders contin- ue to be vocal on a broad range of topics ranging from board composition and M&A to environmental, social and governance concerns and executive remu- neration. Although some companies are more likely than others to be targets, it has become increasingly evident that no company is immune from the threat posed by an activist campaign. Levels of activism, sectoral focus and scale of targets In the first half of 2025, activism levels decreased by 12% compared to the record highs observed in the first half of 2024, but the figures align closely with the average of the previous nine years. Activists have diversified their efforts across sectors, with industri- als, technology and healthcare witnessing the most pronounced concentrations, collectively accounting for 61% of activity in the first half of the year and sig- nificantly exceeding previous yearly averages. Departing from last year’s focus on mega-cap compa- nies, the current period has seen a shift towards firms valued under USD5 billion. As regards the geographical spread of shareholder activism, the USA, Japan and the UK emerged as the busiest, together representing 82% of campaigns in the first half of the year, while Europe experienced below-average levels of activity. Nature of activist demands Campaigns seeking changes in board composition, M&A activity, or strategic or operational overhauls have remained among the most popular avenues of share- holder activism. Notably, the number of activists tar- geting board seats, as well as the corresponding seats
won, has increased: this is reflected in a 16% year-on- year rise in successful outcomes. Prominent activist investors such as Starboard, JANA and Elliott have been particularly effective in proxy contests. Mean- while, demands for M&A transactions have declined in the first half of 2025, partly due to broader economic and geopolitical caution. In this more subdued M&A environment, activists have shifted their focus towards advocating for strategic and operational restructuring at target companies. Among M&A-related initiatives, calls for the outright sale of companies were the most frequent, appearing in 12% of campaigns and affect- ing companies such as Lyft and Unifirst. An equivalent proportion of shareholders pursued break-up strate- gies, evidenced in campaigns involving companies such as Becton Dickinson and SSE. Remuneration Shareholder revolts over director and executive remuneration continue to be a recurring concern. Although executive compensation is rarely the sole driver of activism, it increasingly serves as a tool for highlighting broader management shortcomings and governance issues. Activists often present excessive compensation packages as indicative of misaligned interests between management and shareholders. For instance, in 2024, Elliott Investment Management secured five board seats at Southwest Airlines after amassing an 11% stake and calling for changes, criti- cising the substantial compensation paid to manage- ment despite a significant fall in shareholder value. Similarly, during a high-profile contest with Illumina in 2025, Carl Icahn’s campaign succeeded in electing a board member and precipitated the CEO’s resigna- tion, with Icahn emphasising that the CEO’s compen- sation had risen significantly despite the company’s stock value declining. ESG Campaigns The escalating climate crisis has propelled issues to the forefront of institutional investors’ agendas. Increasingly, these investors view the effective man- agement of ESG risks and opportunities as funda- mental to long-term value creation, integrating such factors into their investment decisions. Consequent- ly, poor ESG performance is now a key criterion for identifying companies as potential targets for activist shareholders.
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INTRODUCTION Contributed by: Spencer Summerfield, Travers Smith LLP
Activism in Listed Investment Trusts A notable development during the past year has been the emergence of activist campaigns targeting the UK’s investment trust sector. The New York-based hedge fund Saba Capital initially targeted seven UK investment trusts in December 2024, having built up stakes ranging from 19% to 29%. Saba called on shareholders to replace the trusts’ directors with its own nominees and, in some cases, to substitute the investment manager altogether, citing underper- formance relative to benchmarks, which had resulted in trading discounts to net asset value. Although none of Saba’s proposals succeeded in securing sufficient investor support for board representation at any of the targeted trusts, the campaign serves as a wake-up call for this sector. Comment Despite a decrease in the overall number of share- holder activist campaigns in 2025, companies should remain vigilant. It is imperative for management and their advisers to be well informed regarding share- holder rights and expectations and to proactively develop strategies for addressing potential activist campaigns. Companies are encouraged to invest in board and management training to prepare for and pre-empt such campaigns. Conducting an audit of potential vulnerabilities may enable a company to address issues on its own terms before they are raised by activists. Maintaining continuous dialogue with shareholders and formulating an initial response plan are also essential. Additional tools and strategies are detailed in the country-specific Law and Practice section of this guide. Global trends clearly indicate that activist interven- tions are no longer confined to niche or emerging issues but now influence major strategic decisions. For investors, a thorough understanding of the legal and commercial options available remains critical to achieving their strategic objectives in increasingly sophisticated markets.
In recent years, the UK has witnessed its first instanc- es of campaigns aimed at holding directors person- ally accountable for climate change. In 2023, NGO ClientEarth instituted a derivative action against the individual directors of Shell plc, alleging their failure to mitigate climate change-related risks. Although signif- icant legal hurdles diminish the likelihood of success, such initiatives – the threat, issuance, and pursuit of permission to continue these claims – serve as tacti- cal tools for well-funded activists to disrupt or influ- ence board strategy and decision-making, while also garnering public attention for their activist investors' causes. Notably, the primary objective behind many climate-related claims may not be to secure a conven- tional legal victory but rather to spotlight practices that contribute to climate change, with litigation serving as one of several available instruments. Anti-ESG Movement The anti-ESG movement continues to gain traction, presenting new challenges for boards that must metic- ulously balance shareholder value considerations with ESG-related decisions. Recent examples include financial activism with an anti-ESG core objective. One such case involves Strive Asset Management, an outspoken investor that has recently spearheaded a campaign aimed at decoupling CEO compensation from ESG and DEI metrics. “Vote No” Campaigns The first half of the year has also seen a resurgence of traditional economic activism characterised by “vote no” or “withhold” campaigns. In these instances, activists encourage other shareholders to oppose one or more incumbent directors without nominating alternative candidates, differentiating these efforts from full-scale proxy contests. This approach high- lights a tactical shift as activists seek to exert influ- ence through simple yet impactful voting strategies.
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BRAZIL
Colombia
Ecuador
Brazil
Peru
Brasilia
Bolivia
Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva Loeser e Hadad Advogados
Rio de Janeiro São Paulo
Paraguay
Chile
Argentina
Loeser e Hadad Advogados was founded in 1989, and the firm now has offices in São Paulo, Campinas, Rio de Janeiro and Brasília. It focuses on business law, particularly corporate, M&A, corporate govern- ance, regulatory, compliance, privacy and data pro- tection, and tax matters. The corporate department, which includes four partners and 16 associates, pro- vides the full gamut of business law advice covering issues such as business implementation, corporate governance, compliance, restructuring, IPO-related matters, divestments, and M&A, including legal due
diligence and post-closing advice. Clients include both buyers and sellers from a wide range of sectors, including regulated and non-regulated, private and publicly held companies, such as banking, private equity, food and beverage, retail, automotive, medi- cal devices, life sciences, energy, and real estate. The firm also applies digital upskilling programs to all its professionals, from law clerks to partners, and uti- lises cutting-edge technology, including AI tools, to bring the utmost digital experience to its clients and allow more efficient deliverables and attractive costs.
Authors
Enrique Tello Hadad is the managing partner of Loeser e Hadad
Daniel Domenech Varga has 15 years of experience in corporate law and is responsible for co-ordinating the M&A practice of Loeser e Hadad Advogados, along with managing partner Enrique Hadad. He has
Advogados and co-ordinates the international transactions practice group, including the corporate and M&A areas. He has extensive corporate law expertise and is highly experienced in the full range of corporate issues, such as restructuring transactions, governance and compliance matters, in addition to M&A legal support. With a strong track record of successful M&A and corporate transactions and recognition from clients for strategic and practical legal advice, Enrique has been a leading partner in corporate transactions in a wide array of business sectors, including the oil and gas and chemicals sectors.
received attention and recognition for his competence, dedication and success in the projects in which he has been involved. He has managed national and international mergers and acquisitions in the chemicals, health, food & beverage, agriculture, IT, industrial automation, energy, entertainment, satellites, defence and car parts industries.
Marcus Luan Silva is an associate at Loeser e Hadad Advogados with over three years of post-qualification experience. His works have included experience with M&A, corporate law and contracts. He works on matters
related to corporate restructuring and general business law.
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BRAZIL Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva, Loeser e Hadad Advogados
Loeser e Hadad Advogados Francisco Matarazzo Avenue, 1400 15 floor Sao Paulo Brazil Email: lh@lhlaw.com.br Web: lhlaw.com.br
Introduction Over the past few years, Brazil has experienced noticeable growth in shareholders’ awareness of and active involvement in corporate governance matters, reflecting a broader global surge in shareholder activ- ism. This article provides: • an examination of Brazil’s evolving shareholders’ rights and activism landscape; • an analysis of the legal framework governing shareholder rights; • an inventory of the tools available to shareholders; and • a breakdown of the defensive strategies adopted by companies to address these developments. Furthermore, it delves into the complexities of the Bra- zilian regulatory environment, shedding light on how companies and investors navigate and adapt to these evolving regulatory changes. The Legal Framework for Shareholders’ Rights in Brazil The rights of shareholders in Brazil are primarily regu- lated by two key pieces of legislation: • the Brazilian Civil Code (Law No 10,406 of 2002); and • the Brazilian Corporation Law (Law No 6,404 of 1976). These laws collectively provide a comprehensive framework that governs the operations of both pub- lic and private companies in Brazil. They outline a wide range of rights and obligations for sharehold- ers, including voting rights, dividend entitlements and protection against unfair treatment. Additionally, these
laws emphasise the importance of transparency and fairness in corporate governance, aiming to foster a robust and ethical business environment. Under this legal framework, shareholders are granted a range of fundamental rights essential for their par- ticipation in the company’s governance. Among these are the rights to vote at general meetings, receive divi- dends, and oversee management actions. The right to vote is particularly significant, as it allows share- holders to influence critical corporate decisions, such as the election of board members, the approval of financial statements, and decisions regarding merg- ers and acquisitions. By exercising their voting rights, shareholders can play a crucial role in shaping the company’s strategic direction and safeguarding their financial interests. In Brazil, protecting minority shareholders’ rights is crucial due to the prevalence of concentrated own- ership structures in many Brazilian companies. This ownership dynamic often places minority share- holders at a disadvantage compared to controlling shareholders. In response to this challenge, Brazil- ian legislation has established specific mechanisms to safeguard the interests of minority shareholders. One prominent mechanism is the “tag-along” right, which grants minority shareholders of publicly traded corporations the right to sell their shares, at a mini- mum price of at least 80% of the price paid to the exiting majority shareholder, in the event of a change in company control. In addition to the tag-along right, minority sharehold- ers in Brazil can initiate legal actions to defend their individual or collective rights. For instance, sharehold- ers can file liability actions against directors who act
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BRAZIL Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva, Loeser e Hadad Advogados
in a manner detrimental to the company’s interests. This legal recourse provides an essential avenue for minority shareholders to hold management account- able and protect the value of their investments. The Rise of Shareholder Activism in Brazil Although shareholder activism is still in its early stages in Brazil compared to more mature markets such as the United States, it has gained significant traction in recent years. This increase in activism is also driven by a growing awareness of environmental, social, and governance (ESG) issues, which have become increasingly important to investors worldwide. In Bra- zil, shareholders use their influence to pressure com- panies to adopt more sustainable and transparent practices. Through engagement with companies and voting on shareholder resolutions, they contribute to a broader movement toward responsible corporate gov- ernance. This trend reflects a shift in investor priorities and a recognition of the importance of sustainable and ethical business practices. Characteristics of shareholder activism in Brazil In Brazil, shareholder activism takes various forms, such as participating in general meetings and organis- ing public campaigns to influence company manage- ment. Activist shareholders often aim to bring about strategic changes within the company, such as replac- ing board members, reevaluating executive compen- sation policies, or adopting more rigorous corporate social responsibility practices. A recent example of shareholder activism in Brazil is the pressure exerted by institutional investors on large companies to adopt more transparent policies regarding their carbon emissions and other environ- mental impacts. This type of activism, often led by investment funds with a clear sustainability agenda, has significantly changed how Brazilian companies approach their ESG responsibilities. In many cases, these changes have been implemented in response to direct shareholder pressure, highlighting the grow- ing influence of activism on the Brazilian corporate landscape. Comparative Analysis: Brazil v Other Markets While shareholder activism is increasing in Brazil, it still faces significant challenges, especially when
compared to more developed markets such as the United States. In the USA, shareholder activism is a well-established practice, with major hedge funds and other institutional investors frequently spearheading campaigns to influence company management. These efforts often succeed in bringing about changes in corporate strategy, governance and operations. In contrast, the corporate culture in Brazil remains relatively conservative, characterised by traditional business practices and decision-making processes. Shareholders, particularly those holding minority stakes, encounter substantial hurdles when attempt- ing to exert significant influence within companies. This is primarily due to the prevalent concentrated ownership structure, where a small number of large controlling blocks hold substantial sway over corpo- rate decision-making. As a result, minority sharehold- ers often find it challenging to form alliances and coali- tions, which hinders their ability to effectively launch activist campaigns and drive meaningful change with- in the companies in which they have invested. Despite these challenges, there are signs that share- holder activism in Brazil is on the rise. The increasing importance of ESG practices, coupled with pressure from international investors, is driving a shift in the Brazilian corporate landscape. As more companies recognise the value of engaging with their sharehold- ers and addressing their concerns, shareholder activ- ism will likely become a more prominent feature of the Brazilian market. Tools and Strategies for Shareholder Activism In order for shareholders to effectively engage in activ- ism, it is crucial that they possess a thorough under- standing of the legal tools and strategies available to them in Brazil. The country’s corporate governance framework offers a range of mechanisms that empow- er shareholders to influence corporate decisions. These mechanisms include, but are not limited to, vot- ing rights, shareholder resolutions, and engagement with company management. However, it is important to note that the effectiveness of these tools can be influenced by factors such as the extent of sharehold- ing, the level of support from other investors, and the regulatory environment. Therefore, shareholders must
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BRAZIL Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva, Loeser e Hadad Advogados
Proxy voting Recent legislative changes and regulatory develop- ments that may encourage shareholder activism include the introduction of proxy voting. The Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, or CVM) has implemented regu- lations facilitating proxy voting, making it easier for shareholders who cannot attend in-person meetings to participate and vote. Regulatory Challenges and the Need for Reform Despite the escalating prevalence of shareholder activism in Brazil, activists encounter substantial regu- latory challenges. While Brazilian legislation has made significant advances in some areas, it still imposes barriers that impede the full exercise of shareholder rights, particularly for minority shareholders. Costs and complexity of activist campaigns One of the main challenges faced by activist share- holders in Brazil relates to the high cost and intricate nature of organising impactful campaigns. The coun- try’s legislation imposes a series of formal require- ments for proposing actions and convening meetings, which can be overwhelming for small investors or groups with limited resources. Additionally, navigating the intricate web of legislation and corporate mecha- nisms requires a profound level of understanding, pre- senting a significant barrier, particularly in a country where financial education and investor participation culture are still in development. Furthermore, many shareholders, especially minority ones, may find themselves lacking access to the nec- essary resources or knowledge to effectively mobilise campaigns. This restriction significantly diminishes the potential for activism in Brazil, as shareholders might be deterred from pursuing their objectives due to the perceived difficulty and expense associated with initiating a campaign. Nevertheless, investors are using social media, virtual forums and proxy solicitation platforms to organise coalitions, influence other shareholders and pressure management. These tools have reduced the cost and complexity of activism, particularly for smaller inves- tors with fewer resources to challenge controlling groups.
carefully assess these factors when considering their activist initiatives in the Brazilian market. Suggesting actions at general meetings One of the key methods employed by shareholders in Brazil to advocate for their interests is to suggest actions or resolutions during general meetings. This avenue is open to any shareholder, provided they adhere to the deadlines and requirements outlined by the law and the company’s bylaws. This mechanism proves to be especially beneficial for minority share- holders who aim to highlight concerns that the man- agement may not prioritise. For instance, shareholders who are focused on enhancing corporate governance may introduce reso- lutions aimed at implementing more stringent trans- parency policies or reevaluating executive compensa- tion practices. Even if these proposals do not receive approval, they can exert pressure on the management and bring crucial issues to the attention of fellow shareholders. This form of activism can be particularly effective in shedding light on governance issues and compelling companies to reevaluate their practices. Calling extraordinary general meetings Shareholders who own at least 5% of a company’s share capital are entitled to exercise their right to request the convening of an extraordinary general meeting (EGM). This meeting allows them to address specific issues that they believe require urgent atten- tion or are not being adequately handled by the com- pany’s management. The EGM serves as a powerful tool for shareholders to voice their concerns and take action when they feel that the company’s best inter- ests are at stake. One common scenario where this right is exercised is when activist shareholders use the EGM to advocate for the replacement of certain board members or to vote on a merger proposal that they deem unfavour- able. By leveraging the EGM mechanism, sharehold- ers can exert significant pressure on the management and influence decision-making in a manner that aligns with their interests, ultimately bringing about changes they believe are necessary for the company’s welfare.
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BRAZIL Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva, Loeser e Hadad Advogados
Concentrated ownership structure The structure of concentrated ownership in Brazil, characterised by the prevalence of large controlling blocks, poses a significant obstacle to shareholder activism. Within many Brazilian companies, control- ling shareholders possess a substantial stake that affords them significant sway in corporate decision- making, thereby creating barriers for minority share- holders seeking to exercise influence. Consequently, the concentrated power held by controlling sharehold- ers can curtail the efficacy of activist campaigns, as they have the ability to dismiss proposals and resolu- tions put forth by minority shareholders. In cases where the interests of controlling sharehold- ers align with those of activist investors, or when there is significant pressure from institutional or international investors, shareholder activism can be more impact- ful. For instance, if controlling shareholders recognise the long-term benefits of embracing ESG practices, they may be more open to considering the demands of activists. This alignment can ultimately lead to posi- tive changes within the company. Need for legal reforms To overcome these challenges, Brazil must continue to promote legal reforms that facilitate shareholder activism and strengthen the protection of minor- ity shareholders, such as reducing the shareholding thresholds required to propose meetings or measures. This adjustment would effectively empower minority shareholders, making it more feasible to exercise their rights and influence corporate decisions. By lowering these thresholds, a broader spectrum of shareholders would be empowered to actively participate in corpo- rate governance, ultimately bolstering management oversight. One important reform is to simplify the procedures for acquiring corporate information. By implementing measures that enable shareholders to access essen- tial information quickly and easily, these reforms will foster more informed decision-making and promote greater shareholder activism. Moreover, advocat- ing for greater transparency in corporate operations and governance would break down barriers to active shareholder participation, ensuring that every share- holder, irrespective of their stake, has the opportunity
to contribute meaningfully to the company’s strate- gic direction. This commitment to transparency and open communication bolsters shareholder trust and engagement, fostering a more inclusive and account- able corporate environment. Corporate Defence Mechanisms As shareholder activism becomes more prevalent in Brazil, companies are developing strategies to pro- tect themselves against activist campaigns. These strategies range from preventive measures to reac- tive responses, depending on the nature of the activist campaign and the interests at stake. Governance shielding One of the frequently employed corporate strategies is referred to as “governance shielding” and encom- passes the inclusion of specific clauses in the com- pany’s bylaws. These clauses are intended to restrict the voting power of shareholders and establish addi- tional conditions for the approval of certain measures. By doing so, companies seek to prevent minority shareholders from exerting influence without majority shareholder support. Despite its widespread use, governance shielding has been subject to criticism. Many argue that it can perpetuate poor governance practices and serve as a safeguard for existing management against legiti- mate challenges. Therefore, companies must navigate a delicate balance, ensuring protection against activist interference while upholding transparent and respon- sive corporate governance principles. It is incumbent upon companies to carefully monitor governance shielding to avoid its potential misuse as a means of increasing management authority to the detriment of shareholder rights. Active dialogue with shareholders Another fundamental strategy for companies is main- taining an active and ongoing dialogue with their shareholders. This involves responding to sharehold- ers’ concerns during general meetings and proactively engaging throughout the year, seeking to understand investors’ expectations, and adjusting corporate prac- tices as necessary.
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BRAZIL Trends and Developments Contributed by: Enrique Tello Hadad, Daniel Domenech Varga and Marcus Luan Silva, Loeser e Hadad Advogados
Conclusion Shareholder activism in Brazil has experienced nota- ble growth, which aligns with the global trend of increased investor participation in corporate govern- ance. Although the country still faces regulatory and cultural hurdles, the existing legal frameworks and a dynamic governance environment suggest a promis- ing future for advancing shareholders’ rights in Bra- zil. This trend reflects a broader movement towards greater shareholder empowerment and influence on corporate decision-making processes. In light of the rapidly changing business landscape, companies must adjust to this new reality by imple- menting defensive strategies and actively engaging with shareholders. The ability to navigate this increas- ingly dynamic and competitive environment will ensure their resilience and success. Moreover, as shareholder activism advances, the future of corporate govern- ance in Brazil will hinge on the collaborative efforts of shareholders and companies in establishing sustain- able value. This will necessitate a delicate balance between the short-term and long-term interests of all parties. This collaborative approach, supported by ongoing legal reforms and a commitment to transparency, will be key to fostering a robust and vibrant corpo- rate governance landscape in Brazil. The continued growth of shareholder activism, coupled with these legal reforms, will not only enhance the accountability of companies but also contribute to the broader devel- opment of the Brazilian capital market.
By maintaining open lines of communication with shareholders, companies can anticipate and mitigate potential activist movements before they become public. This proactive engagement can reduce the risk of confrontations damaging the company’s reputation and value. Moreover, by building trust with their share- holders, companies can secure their support during times of crisis, ensuring that they have the backing of their investors when faced with challenging decisions. Reactive responses to activist campaigns When an activist campaign is already underway, com- panies need to be able to respond effectively. This may involve a variety of strategies, from direct nego- tiation with the activists to mobilising support among other shareholders to defeat activist proposals. In some cases, it may be prudent for the company to consider embracing some of the demands put forth by the activists, particularly if these demands are poised to yield long-term benefits for the company. For exam- ple, if activists advocate for enhanced transparency or better ESG practices, aligning with these requests can strengthen the company’s corporate reputation and appeal to a broader investor base. In other cases, companies may need to adopt a more defensive stance, using all available legal tools to resist the proposed changes. This could involve chal- lenging the legality of the activists’ proposals or ral- lying support from other shareholders to oppose the activists’ agenda. Ultimately, the effectiveness of the company’s response will depend on its ability to navi- gate the complex dynamics of shareholder activism and align its strategy with the long-term interests of all shareholders.
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CHINA
Trends and Developments Contributed by: Jiang Guoliang, Huang Jie, Xie Tingting and Lang Tao T&C Law Firm T&C Law Firm is a prestigious full-service law firm founded in 1986 and based in China, where it has been established as a leading domestic elite law firm for its outstanding professional services. T&C has built a strong reputation for excellence in areas such as business, finance and dispute resolution, both within and outside the legal community. T&C current-
ly has five offices nationwide, located in Hangzhou, Beijing, Shanghai, Shenzhen, Ningbo and Wuhan, which together form an integrated service network. The firm has a legal service team consisting of over 600 professionals specialised in certain practice ar- eas.
Authors
Jiang Guoliang is a partner with nearly 20 years’ extensive experience in commercial dispute resolution and advisory work for asset management, private equity investment and corporate governance. Jiang has
Xie Tingting is a senior associate at T&C Law Firm. Since joining the firm in 2016, she has advised on a wide range of transactions, including bond issuances, equity transfers, corporate financing, and mergers and
represented numerous leading Chinese groups in cases related to international and domestic trade. Jiang also counsels state-owned, private, and foreign-invested enterprises on investment and M&A, and leads various projects concerning the preparation and investment of equity funds covering fields of infrastructure, new materials, biomedicine, etc. Jiang is widely recognised and recommended by a number of leading publications. Jiang obtained a bachelor’s degree from Peking University.
acquisitions. She has extensive experience in both dispute resolution and non-contentious matters, particularly in the areas of corporate governance, state-owned enterprises, and private equity funds. Xie obtained a bachelor’s degree and a master’s degree from East China University of Political Science and Law.
Lang Tao is an associate at T&C Law Firm. He focuses on M&A, corporate governance, and general corporate matters, and has worked on a variety of investment and financing projects as well as complex dispute resolution
Huang Jie has been a partner in T&C Law Firm since 2013 and specialises in the areas of securities and investment, private equity funds, and dispute resolution. Huang is the perennial legal counsel for many
cases in the fields of finance and corporate governance. Lang obtained his bachelor’s degree from the University of California, Davis, and his Juris Doctor degree from Emory University in the United States.
state-owned enterprises and has counselled clients in a number of cases in the field of commodity trade, and has participated in various complex financial risk disposal projects. Huang obtained a bachelor’s degree and a master’s degree from Peking University, and also obtained a master’s degree in European Law from Université de Paris I.
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CHINA Trends and Developments Contributed by: Jiang Guoliang, Huang Jie, Xie Tingting and Lang Tao, T&C Law Firm
T&C Law Firm 7/F Block A Huanglong Century Square No.1 Hangda Road Hangzhou 310007 Zhejiang China Tel: +86-571 8790 1111 Fax: +86-571 8790 1500 Email: tchz@tclawfirm.com Web: www.tclawfirm.com
Shareholder Rights Under China’s New Company Law: Practical Guidance and Early Observations In the 2024 Chambers Trends & Developments arti- cle, T&C Law Firm analysed the amendments to the PRC Company Law (the “New Company Law”) from a statutory perspective, focusing on how the revised provisions expanded shareholder rights, lowered thresholds for shareholder actions, and introduced new remedies. Since the New Company Law came into effect on 1 July 2024, it has begun to shape corporate practice. While reported cases remain relatively few, the leg- islation has already generated significant discussion among courts, practitioners, and academics. These early judicial indications and expert interpretations offer important insights into how the new provisions may operate in practice. This year’s article, therefore, moves beyond textual comparison to practical application. Drawing on emerging judicial commentary, expert opinions, and a few illustrative cases, the aim is to provide guidance to the shareholders – particularly minority sharehold- ers – on how to exercise and safeguard their rights effectively under the new regime. Strengthening shareholder rights before disputes arise Expanded scope of shareholder information rights Under the previous law, minority shareholders fre- quently faced limited inspection rights and inconsist- ent judicial enforcement. Article 57 of the New Com-
pany Law addresses these concerns by expanding and clarifying shareholder information rights. Share- holders are now expressly entitled to inspect and copy the shareholder register, enabling them to verify equity structures and track changes in shareholding. Additionally, shareholders may review the company’s accounting vouchers and financial records. In practice, shareholders should be mindful of the scope of their information rights. While shareholders are permitted to take notes or make excerpts from accounting records, such extracts must remain within a reasonable scope and proportional to the purpose of inspection; in other words, one-to-one reproduction of the original records is generally not allowed. A further point of contention in judicial practice con- cerns whether supporting materials attached to the original vouchers and kept for record-keeping purpos- es fall within the right to information. One judicial view holds that, under the PRC Accounting Law, “account- ing vouchers” comprise only original vouchers and bookkeeping vouchers, and therefore, such support- ing materials are not part of the statutory inspection scope. This position often involves balancing the shareholders’ right to information against the need to protect the company’s trade secrets. Given that post- amendment case law remains limited, further judicial clarification on this issue is anticipated. In enforcement, courts have required non-compliant companies to prepare specified electronic account- ing records – including the general ledger, subsidiary
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CHINA Trends and Developments Contributed by: Jiang Guoliang, Huang Jie, Xie Tingting and Lang Tao, T&C Law Firm
ledgers, journals, and auxiliary ledgers – for on-site review within three business days. Persistent refusal may result in fines or consumption restrictions on the company’s legal representative. In practice, where the parties have a dispute over matters of enforce- ment – such as the timing or scope of execution – the enforcement court has the authority to resolve the disagreement by organising both parties to inspect the relevant company documents at a fixed time and place. Improved rights to submit proposals and convene meetings The New Company Law refines both the shareholder proposal right and the right to convene shareholders’ meetings. First, it lowers the shareholding threshold required to submit a proposal. For public companies, the minimum shareholding for shareholders to put for- ward an interim proposal has been reduced from 3% to 1%. This significantly lowers the barrier for minority shareholders to exercise their proposal rights, ena- bling greater participation in corporate governance. The change is particularly meaningful in listed com- panies, where shareholding is often widely dispersed, making it easier for minority shareholders to initiate proposals. Second, the new law clarifies the procedures and time limits for convening a meeting. Under Paragraph 3 of Article 114, shareholders holding 10% or more of the company’s shares – whether individually or in aggregate – may request that an interim shareholders’ meeting be convened. The board of directors or the board of supervisors shall, within ten days of receiv- ing such a request, decide whether to convene the meeting and provide a written reply to the requesting shareholders. This provision outlines explicit proce- dural and timing requirements, thereby reducing the risk of delays by the board or supervisory board. Following the introduction of these provisions, there have already been cases of shareholders holding less than 3% of the shares submitting interim pro- posals. For example, on 12 May 2025, the board of KLT received an interim proposal from a shareholder holding 2.14% of the company’s shares, proposing to terminate a restricted stock incentive plan. After verifying compliance with statutory requirements and
the articles of association, the board placed the pro- posal on the agenda of the annual general meeting – demonstrating the tangible impact of the reduced threshold. In practice, shareholders should take note of several key points. First, any shareholder holding at least 1% of the company’s shares, individually or in aggregate, may submit an interim proposal. “Aggregate holding” can arise where multiple shareholders act jointly or where one shareholder publicly solicits proposal rights from others. Second, proposals must comply with the timing requirement: eligible shareholders may submit an interim proposal in writing to the board of directors no later than ten days before the scheduled date of the shareholders’ meeting. There are different calcula- tion methods used in practice for determining this ten- day deadline, and the law does not prescribe a spe- cific approach. Companies should adopt the method best suited to their circumstances, record it in their internal governance rules, and apply it consistently in future operations. Shareholders, in turn, should ensure their proposals are submitted in accordance with the adopted calculation method to avoid procedural chal- lenges. Facilitating meetings via electronic communication Article 24 of the New Company Law expressly pro- vides that a company may convene shareholders’ meetings, board meetings, and supervisory board meetings, and conduct voting through electronic com- munication. The introduction of this mechanism facili- tates shareholder participation in decision-making, reduces participation costs, and broadens the scope of shareholder involvement. Shareholders should be aware that the term “elec- tronic communication” should be interpreted to mean real-time, interactive methods that replicate the imme- diacy of in-person meetings. At least two participants must be able to exchange text or image messages and engage in simultaneous voice or video interaction via the internet or mobile technology. Fax and email – which do not provide real-time interaction – are not suitable, as they risk conflating electronic meetings with written resolutions made without a meeting.
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CHINA Trends and Developments Contributed by: Jiang Guoliang, Huang Jie, Xie Tingting and Lang Tao, T&C Law Firm
Despite the flexibility of electronic communication, procedural requirements remain critical. Companies must ensure compliance with statutory requirements and the articles of association governing notice, quo- rum, and voting procedures. Advance notice of the meeting and agenda must be served lawfully, and the process must ensure that all shareholders – espe- cially minorities – can effectively exercise their rights to information, questioning, and voting. The articles of association should specify acceptable electronic methods, verification procedures, and record-keeping requirements to minimise the risk of defective resolu- tions. Remedies available after rights have been infringed Improved mechanism for shareholders’ derivative action Paragraph 4 of Article 189 of the New Company Law introduces the double derivative action, allowing shareholders of a parent company to bring proceed- ings in their own name to protect the interests of a wholly owned subsidiary where the subsidiary’s board of directors or supervisory body refuses or fails to act. This mechanism is designed to counter a common tactic in practice whereby a controlling shareholder suppresses minority shareholders by transferring assets and diverting benefits through a wholly owned subsidiary. At the parent level, minority sharehold- ers may hold veto rights over major matters such as capital increases or reductions, making it difficult for the controlling shareholder to push through certain transactions. By establishing a wholly owned subsidi- ary, however, the controlling shareholder gains com- plete control over the subsidiary’s decision-making, free from minority oversight. With the introduction of the double derivative action, minority sharehold- ers who detect harm to the subsidiary’s interests can now “pierce” the corporate structure and seek relief directly. In practice, minority shareholders seeking to protect their rights should pay close attention to the following matters. • Scope of application – The remedy is strictly limited to wholly owned subsidiaries. Even where the parent company holds more than 99% of the equity, the statutory standing for a double deriva-
tive action is not satisfied unless the parent entirely owns the subsidiary. This narrow drafting is inten- tional: it focuses the remedy on structures most susceptible to abuse and least likely to be policed through internal governance mechanisms. • Standing and timing – Eligibility depends on a shareholder’s status at the time of filing, rather than when the alleged misconduct occurred. In other words, a plaintiff who acquires shares in the parent company after the harmful act took place may still bring a claim for conduct that damaged the sub- sidiary before they became a shareholder, provided that the harm continues or its consequences per- sist after they acquired shareholder status. • Litigation strategy – In court proceedings, disputes often centre on the evidentiary thresholds for establishing “continuing infringement” and proving a governance deadlock within the wholly owned subsidiary; thus, it would be beneficial to focus on securing evidence in three key areas: (a) a precise timeline of the impugned acts (eg, contract execution date, fund transfer date); (b) documentary proof that written requests for action were submitted to both the parent com- pany’s and subsidiary’s governance bodies; and (c) materials that establish the causal link between the subsidiary’s loss and the shareholder’s loss. Expanded right to exit Article 89 expands the right to exit for shareholders of limited liability companies by introducing an oppres- sion-based redemption mechanism alongside tradi- tional rights to exit. When a controlling shareholder misuses their rights in a way that seriously harms the company or other shareholders, an affected share- holder may demand that the company buy back their shares at a fair price. Judicial application remains cautious. Reported judg- ments expressly applying Article 89 are not yet avail- able, and courts are sensitive to the implications of a forced redemption for capital maintenance, internal shareholding balance and creditor protection. Early signals suggest that “abuse” will be confined to con- duct marked by bad faith, improper extraction of ben- efits or deprivation of basic shareholder rights, rather than ordinary business decisions taken with proce-
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